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Kevin Douglas

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Kevin Douglas has deep experience representing public companies on corporate and securities laws related matters, including companies within the healthcare industry. Kevin’s public company practice focuses on corporate governance matters, securities laws compliance, mergers and acquisitions, corporate finance and shareholder activism. His representative experience has ranged from providing SEC disclosure advice to the audit committee of a Fortune 100 company to representing an NYSE-listed company in connection with its $4.3 billion acquisition by another public company to representing another NYSE-listed company in connection with its issuance of $2.2 billion in senior notes. Kevin has also represented private companies in a wide variety of mergers and acquisition, corporate finance, and other corporate law matters.

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The Securities Exchange Commission (SEC) recently issued interpretive guidance, effective February 25, 2020, regarding the disclosure of key performance indicators and metrics (KPIs) in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).

While this guidance may not have been an area of significant focus for many companies in the recent periodic reporting cycle given that the effective date of this guidance was after the time that many calendar-year public companies filed their Annual Reports on Form 10-K, this guidance will need to be considered in connection with the preparation of upcoming Quarterly Reports on Form 10-Q.

Overview of the Staff’s Recent Guidance Regarding KPIs in MD&As

The MD&A is generally required to contain discussion of a company’s financial condition, changes in financial condition, and results of operations. Also, according to Item 303(a) of Regulation S-K, the MD&A is also required to contain discussion of information not specifically referenced in the item that the company believes is necessary to an understanding of its financial condition, changes in financial condition, and results of operations. Instruction 1 to Item 303(a) also provides that the MD&A should include a discussion and analysis of other statistical data that in the company’s judgment enhances a reader’s understanding of MD&A.Continue Reading SEC Interpretive Guidance on Key Performance Indicators and Metrics in MD&A, and a Recent KPI Comment Letter

On March 2, the Securities Exchange Commission (SEC) adopted amendments that, among other things, significantly reduce the subsidiary guarantor financial statement requirements in periodic reports for companies that have registered debt that is guaranteed by subsidiaries. These changes are part of the SEC’s ongoing efforts to modernize and ease disclosure burdens for public companies.  The SEC hopes that these amendments will facilitate an increase in the number of registered (versus unregistered) debt offerings.

Although the amendments do not become effective until January 2021, in light of the relief offered, many companies are preparing to voluntarily comply with the amendments in advance of the effective date (which is expressly permitted by the SEC).

This alert briefly describes the changes to existing reporting requirements for subsidiary guarantors.  The SEC’s press release announcing the changes and full text of the final rule can be found here.Continue Reading SEC Provides Welcome Relief from Reporting Requirements for Subsidiary Guarantors

In a previous blog post, we described the steps some states have taken or are currently taking to permit or facilitate virtual shareholder meetings (i.e., “virtual-only” or “hybrid” meetings) in light of the numerous restrictions on travel and large gatherings resulting from the COVID-19 pandemic.

The governors of California, Massachusetts and North Carolina subsequently issued executive orders that suspend the application of state law that would otherwise render a virtual annual meeting impractical or impossible.

California

On March 30, 2020, and effective for meetings that have already been scheduled or must occur before June 30, 2020, the governor of California issued an executive order suspending the application of California Corporations Code Sections 20 and 600, which require a corporation to obtain the consent of its shareholders before holding a virtual annual meeting.Continue Reading More States Temporarily Ease Restrictions on Virtual Annual Meetings

As companies continue to evaluate the impact of the novel coronavirus (COVID-19) pandemic on their business, public companies will be facing challenging disclosure considerations in connection with their upcoming first-quarter earnings calls and earnings releases.

As a backdrop, a significant number of public companies, concentrated in industries which have felt the strongest immediate impact of the crisis (such as companies whose business is tied to the travel industry), have either updated (e.g., Mastercard) or withdrawn (e.g., Hyatt Hotels, MGM Resorts, Twitter) their 2020 guidance due to the economic fallout and the uncertainty surrounding this pandemic.

Whether or not a public company has updated or withdrawn its 2020 guidance based on COVID-19 considerations, public companies will face challenging disclosure decisions as they approach their first-quarter (for calendar year-end companies) earnings releases and earnings calls.  A key reference point in this regard is CF Disclosure Guidance, Topic No. 9, issued by the Division of Corporation Finance on March 25, which highlights the perspective of the Staff regarding various disclosure considerations related to the COVID-19 pandemic.Continue Reading High-Level Considerations for First-Quarter 2020 Earnings Releases and Guidance in Uncertain Times

In a previous blog post, we discussed the availability of virtual shareholder meetings (i.e., “virtual-only” and “hybrid” meetings) as a potential alternative to the traditional in-person meeting during the 2020 proxy season in light of the public health and safety crisis posed by the novel coronavirus (COVID-19) pandemic (we also discussed virtual annual meeting guidance provided by the SEC in a subsequent blog post). In response to COVID-19, states such as Connecticut, Georgia, New Jersey and New York have taken steps to remove barriers to virtual annual meetings under existing state law. Continue reading to learn more about steps these states are taking.
Continue Reading States Remove Barriers to Virtual Annual Meetings in Light of COVID-19 Pandemic

The ongoing fallout from the pandemic associated with the novel coronavirus (COVID-19) continues to challenge companies, boards and management teams across all aspects of their business.  In trying times like these, senior management team members are meeting regularly to discuss the impact of the virus on their business operations and formulate contingency plans that must be put into place to manage through this difficult environment.

Sometimes, management teams can be so focused on managing through a crisis that they fail to implement the protocols they are adopting for their broader associate base amongst themselves.  For instance, many companies have recently implemented social distancing protocols among their employees including, remote working arrangements, limiting large meetings or non-essential face-to-face meetings.  Meanwhile, groups of senior managers are meeting in-person in close contact with one another.Continue Reading Senior Management and Boards in the Time of Social Distancing

In a previous blog post, we discussed the availability of virtual shareholder meetings (i.e., “virtual-only” and “hybrid” meetings) as a potential alternative to the traditional in-person meeting during the 2020 proxy season in light of the emerging public health and safety crisis posed by the coronavirus pandemic (COVID-19). The Staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance and Division of Investment Management subsequently issued guidance for conducting virtual annual meetings under these unprecedented circumstances.

Post-Proxy Filing

The Staff confirmed that if a company has already mailed and filed its proxy materials, the company can notify shareholders of a change in the date, time or location of the annual meeting without amending its definitive proxy materials or mailing additional soliciting materials if the company issues a press release announcing the change, files the announcement as definitive additional soliciting material on EDGAR, and takes all reasonable steps necessary to inform other interested parties in the proxy solicitation process (e.g., any proxy service providers and applicable national securities exchanges) of the change. These actions should be taken promptly after the decision to hold a virtual meeting is made and, in any case, sufficiently in advance of the annual meeting. Therefore, companies that have already filed and mailed their definitive proxy materials would not need to mail additional soliciting materials (including new proxy cards) solely to switch to a “virtual” or “hybrid” meeting if they follow the steps described above for announcing a change in the meeting date, time, or location.Continue Reading SEC Staff Provides Guidance for Conducting Virtual Meetings in Light of COVID-19 Pandemic

Across the globe, the coronavirus pandemic (COVID-19) is causing governments, companies, associations and colleges and universities to take unprecedented steps to address the spread and transmission of COVID-19. These steps include imposing restrictions on travel and public life; closing physical offices or campuses; canceling conferences, meetings and other scheduled group activities; restricting the size of gatherings; and encouraging or requiring employees and students to telecommute.

With increasing COVID-19 concerns in the United States and proxy season underway, public companies, including those that have already mailed proxy materials, may need to consider alternatives to conducting in-person shareholder meetings in light of the emerging public health crisis posed by the COVID-19 pandemic. Specifically, companies should assess whether or not a virtual meeting format is a viable alternative to the customary in-person meeting. Virtual meetings are generally divided into the following two categories:

  1. Virtual-only meetings conducted solely using remote communication.
  2. Hybrid meetings conducted in-person with concurrent participation by remote communication.

Continue Reading COVID-19 Pandemic Causes Public Companies to Reevaluate Virtual Meetings

In a previous blog post, we discussed the Delaware Chancery Court’s decision in Saba Capital Master Fund, Ltd. v. Blackrock Credit Allocation Income Trust and its relevance to the interpretation of advance notice bylaw provisions. On appeal, the Delaware Supreme Court reversed the decision of the Chancery Court and strictly applied the deadlines set forth in the defendants’ unambiguous advance notice bylaw provisions.

Background of the Chancery Court Decision

In Saba, the defendants were two affiliated closed-end funds who sought to disqualify the director nominees of an activist shareholder because the activist shareholder did not strictly comply with the requirements of the advance notice provisions of the defendants’ bylaws. As allowed pursuant to the bylaws of the funds, the defendants had requested a response to a supplemental information request from the activist shareholder before a five-business day deadline.Continue Reading Advance Notice Bylaw Provisions Upheld by Delaware Supreme Court

The recent SEC enforcement action against ADT Inc. for its failure to comply with the SEC’s equal prominence requirements applicable to non-GAAP financial measures, as outlined in our recent blog post, is a clear reminder that public companies need to continue to be vigilant about the SEC’s non-GAAP financial measure rules.  Also, the Staff has continued to focus on non-GAAP compliance in its comment letters, with non-GAAP financial measures being one of the leading areas of Staff comment over the last couple of years.

There are different layers of the SEC’s non-GAAP financial measures rules which apply to public companies in varying circumstances, depending on the nature of the public disclosure.  Comprehensive knowledge regarding which level of the SEC’s non-GAAP financial measure rules applies to any particular disclosure is a key component when assessing legal considerations and risk in connection with the disclosure of non-GAAP financial measures.Continue Reading Navigating the Maze: Which SEC Rules Apply to Your Non-GAAP Financial Measure Disclosures

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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